September 5, 2007 in Business

Avista sees a change in the wind

By The Spokesman-Review
 

Avista Utilities plans to sell more electricity generated by natural gas plants and giant windmills rather than investing in new coal power plants, according to a long-term power plan released Tuesday.

Clint Kalich, the company’s resource planning manager, said he agrees with the assessment of Puget Sound Energy that the future of Northwest energy will be more “gassy, windy.”

Washington utilities submit 20-year power plans every other year to state regulators. The studies predict population and business growth and future energy needs.

While the Northwest has long relied on river dams for generating ample megawatts, the future lies in underground gas stores and the wind.

In a change from power planning in 2005, Avista this time around is ruling out new megawatts from coal plants. The company has also determined that building and partnering in a nuclear power plant is too expensive and too unpredictable.

Also, the company has backed away from the notion of possibly procuring electricity in the future from the Alberta oil sands, where companies are strip-mining vast swaths of countryside to reach oil trapped in the sand. Some extraction methods generate steam, which can be used to make electricity.

The problem is the cost of plant construction and the cost and logistics of stringing transmission wires across the Rocky Mountains.

Timing is important to the regulated utility serving Spokane and North Idaho. Within seven years, Avista forecasts an electricity deficit.

So the company’s planning strategy includes using the Lancaster natural gas fired power plant at Rathdrum to meet much of its new demand.

Avista sold the Lancaster plant to Coral Energy as part of the larger deal to sell subsidiary Avista Energy.

With about 275 megawatts available from Lancaster beginning in three years, Avista planners are optimistic the utility may have a key piece of its future electricity needs sewn up. About 180,000 homes can be powered with 275 megawatts.

The latest thinking moving the utility against coal is twofold:

First are state laws banning the sale of new coal-fired megawatts for use in Washington. And the company is concerned about producing greenhouse gases, the leading contributor to climate change, more commonly called global warming.

Washington voters have passed initiatives requiring utilities to use more renewable resources such as wind and solar.

Second is the price of building new coal plants. The company’s long-range planners said an industry study showed that the cost of raw construction materials such as cement and steel is far higher than thought just two years ago.

Here are a few other highlights from the company’s 2007 Electric Integrated Resource Plan:

“New power includes broader conservation measures that could save 87 megawatts.

“The cost of electricity produced from wind has climbed 50 percent in the last two years, partly because of what Avista calls artificially higher prices fueled by legislation.

“Removing coal from the future power equation will help Avista keep its carbon production small as compared to other utilities.


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